KUALA LUMPUR, Aug 8 — Maybank Investment Bank Bhd (Maybank IB) has maintained its neutral call on Malaysian shipping and ports despite the recent strength in container freight rates.
The research firm remains cautious on the near-term outlook as downside risks persist due to the supply-demand imbalance in the container shipping industry which is not expected to end soon.
“Peak season demand is expected to be subdued in the second half of 2023 due to high US inventory levels which are expected to prolong destocking activities.
“The market is also facing a capacity explosion with a significant increase in the container fleet, putting further pressure on shipping rates,” it said in a note today.
Seaport operators Westports Holdings Bhd has defied the subdued global container shipping near-term outlook, revising its 2023 container volume growth guidance up during the second quarter of 2023 results briefing, mainly driven by strong gateway cargoes and market share recovery.
“We are projecting a six per cent year-on-year growth in its container volume this year, last year’s growth was -3 per cent, compared with its revised internal growth projection of a high single digit,” Maybank IB noted.
The World Container Index (WCI) composite has been steadily increasing since July 2023, driven by the peak shipping season.
Last week, it surged 12 per cent week-on-week (w-o-w), reaching US$1,761, the highest since May 2023.
Moving into August, the WCI composite experienced a significant 12 per cent week-on-week jump, reaching US$1,761 (RM8,057.46) in the first week of the month.
This increase was primarily driven by rate hikes in the East-West trade lanes, with major shipping liners such as AP Moller-Maersk A/S and CMA CGM implementing substantial rate adjustments on specific trade routes from Aug 1.
Maybank IB said freight rates are facing notable downward pressure primarily due to subdued peak season demand, with US inventory levels remaining high.
Leading shipping liners, including Maersk, CMA CGM and ONE, have observed prolonged destocking activities that are expected to extend into the second half of 2023.
As a result, a significant volume recovery is not anticipated until the end of 2023 or early 2024.
— Bernama
